Nucleon, Inc.

Nucleon is a small biotechnology company whose first potential product is about to enter clinical testing. Before Nucleon can begin clinical trials, however, its management must decide how and where to manufacture the product. Three options are being contemplated: 1) build an in-house pilot plant, 2) contract production to a third-party, 3) license the development, manufacturing, and marketing rights to a corporate partner. Allows discussion of a number of manufacturing strategy issues relevant to R&D-intensive entrepreneurial firms. A key issue is the strategic value of in-house manufacturing to a company that competes largely on very distinctive and specialized R&D capabilities.